Energy in Saudi Arabia involves petroleum and natural gas production, consumption, and exports, and electricity production. Saudi Arabia is the world's leading oil producer and exporter.
Saudi Arabia's economy is petroleum-based; oil accounts for 90% of the country's exports and nearly 75% of government revenue.[1]
The oil industry produces about 45% of Saudi Arabia's gross domestic product, against 40% from the private sector.[2] Saudi Arabia has per capita GDP of $20,700.[2] The economy is still very dependent on oil despite diversification, in particular in the petrochemical sector.

For many years the Kingdom has been the world's largest petroleum producer and exporter. In 2011 it pumped about 10.782 million barrels per day (1.7142×10^6m3/d) of petroleum.[1] While most of this is exported, domestic use is rapidly increasing, primarily for electricity production.
Saudi Arabia also has the largest, or one of the largest, proven crude oil reserves (i.e. oil that is economically recoverable[3][4]) in the world (18% of global reserves, over 260 billion barrels (41×10^9 m3)).

Saudi Arabia, has one of the largest reserves of natural gas in the Persian Gulf. Proven natural gas reserves are over 7 trillion cubic metres (250 trillion cubic feet). Global production in 2009 reached 29 billion barrels (4.6×10^9 m3) of oil and 3 trillion cubic metres (110 trillion cubic feet) of natural gas.[5] but due to its sizeable domestic gas markets, is "unlikely to become LNG exporters anytime soon". Saudi Arabia is prioritising upstream gas investment, but for use in the domestic power generation market, not for export.[6]

The country has had plans to diversify its energy sources for some time, developing solar[7] and nuclear power.[8]

As of January 2007, Saudi Aramco's proven reserves were estimated at 259.9 billion barrels (41.32×10^9 m3), comprising about 24% of the world total.[10] They would last for 90 years at the current rate of production. 85% of Saudi oil fields found have not produced oil yet.[11]

The Ghawar oil field is the largest oil field in the world, holding over 70 billion barrels (11×10^9 m3). Ghawar is able to produce 5 million barrels per day (790×10^3 m3/d) of oil.[10] Aramco announced 100 thousand barrels per day (16×10^3 m3/d) expansion and integration with neighboring petrochemical plants in Ras Tanura and Yanbu by 2010 to 2012.[2]

However, according to journalist Karen Elliott House, "some energy experts are convinced that current reserves are substantially lower than those officially claimed by Saudis and that the depletion rate is substantially faster."[12]
According to a former senior executive of the state-run Aramco oil company Sadad Ibrahim Al Husseini the country's real oil reserves are 40% lower than the official estimate of 716 billion barrels of oil.[13] House states, "no convincing evidence ever has been provided to support the increase [in Saudi oil reserves]. And tellingly, in 1982 the kingdom and other OPEC oil producers ceased releasing production data by field. ... Finally, Saudi Arabia has not revised its reserve estimate since 1988, even though it has pumped somewhere between 5 million and 9 million barrels a day for the intervening two decades, for a total of nearly 50 billion barrels."[12]

New oil fields will add up to 3.6 million barrels per day (570×10^3 m3/d) to production capacity by 2011. The new fields are Haradh, Khurais, Khusaniyah, Manifa, Neutral Zone (shared with Kuwait), Nuayyin and Shaybah I II & III.

Saudi-Arabia is the major oil producer in the world accounting for 12.9% of the global production.[14]

Saudi Arabia produces over 10 million barrels per day (1.6×10^6 m3/d) of oil,[1] exporting 8.9 million barrels per day (1.41×10^6 m3/d). The government is investing over $71 Billion to increase oil production to near 12 million barrels per day (1.9×10^6 m3/d) by 2009 and up to 12.5 million barrels per day (1.99×10^6 m3/d) by 2015.[2] This may be attributed to the report that 700 thousand barrels (110×10^3 m3) of excess capacity are needed to compensate for a natural decline in availability.[2]

The future of Saudi Arabian oil is complicated by the fact that the major Saudi oil fields are extremely old and have been producing oil for decades. Corrosion is becoming a large problem in addition to many other problems that come over time. The result is that most of the easily produced oil is gone from these fields and tapping the rest of the oil is probably going to be much more difficult and more expensive. Such increased difficulty and expense may indicate that Saudi Arabian oil fields have already peaked.[11]

The majority of the oil is shipped via supertankers to refineries around the world. Three major ports are used for the shipping. Ras Tanura is the world's largest offshore oil loading facility with 6 million barrels per day (950×10^3 m3/d) capacity. The Ras al-Ju'aymah facility, on the coast of the Persian Gulf, loads nearly 75% of the exports. The last of the three largest terminals is the Yanbu terminal located on the Red Sea.[2] The enormous sea shipping capacity is vital to Saudi Arabia given the absence of international pipelines.

The Kingdom's consumption of its own oil production has steadily increased and it now consumes about one quarter of its oil production (approximately three million barrels per day).[3] As of 2012 petrol in Saudi Arabia was sold at a price cheaper than bottled water—approximately $.50 US per gallon.[15] According to Jim Krane, "Saudi Arabia now consumes more oil than Germany, an industrialized country with triple the population and an economy nearly five times as large."[3][16] According to a report by Citigroup’s analyst Heidy Rehman, "As a result of its subsidies we calculate 'lost' oil and gas revenues to Saudi Arabia in 2011 to be over $80 billion",[17] adding that "at the domestic level, we believe the only real way to rationalize energy consumption would be to reduce subsidy levels."[3]

Until 1973 the government did not receive a share of the oil drilled within its boundaries. In 1973 the Saudi government gained a 25% share of the interest from Aramco.[10] In 1980 the Saudi government purchased nearly 100% of the Aramco oil business giving Saudi officials complete control over prices and production. In 1988 the oil company was renamed Saudi Aramco.[10] The company is controlled by the government but also has a board of advisors and a CEO. The current CEO and President of Saudi Aramco is Amin H. Al-Nasser.[10]

The future prospects of energy in Saudi Arabia have been studied extensively by the King Abdullah Pertroleum Studies and Research Center (KAPSARC).[18][19] Furthermore, Saudi officials are not concerned about alternative energy sources hurting the market for its exports. In a recent interview with CBS, they asked Saudi Arabia’s oil minister the following question: "Let me be blunt, okay? And ask you to be candid: is it Aramco’s hope to prevent a switch away from oil? Somebody said, 'The country is the oil business.' You absolutely need to do this for your own survival".[20] The minister responded by stating that:

“Yeah, we admit a fact that yes, we depend on the oil industry. We want it to help us, you know, to develop our economy and develop the economy of the world. So what is good for the wellbeing of Saudi Arabia should be good for the wellbeing of the world, too… we have to be realistic. We don't have the alternatives today”.[20]

Saudi oil policy is shaped by multiple factors and as these factors change and/or as new information becomes available, Saudi Arabia’s oil policy will also change.[21]

Saudi Arabia has the world's fourth largest reserves of natural gas, of 240 trillion cubic feet (6.8 trillion cubic metres). One-third of this reserve is found in the Ghawar.[2] Before the master gas system, the oil company flared (burned) the gas as it came from the oil well. Until recently production of natural gas was tightly controlled as it is so closely linked to oil production. The World Trade Organization criticized the government and Aramco for heavily subsidizing natural gas. According to the Energy Information Administration the price was $0.75 MMBtu American dollars.[2]

Saudi Arabia is the fastest growing electricity consumer in the Middle East, particularly of transportation fuels. In 2005, Saudi Arabia was the world's 15th largest consumer of primary energy, of which over 60 percent was petroleum-based. The remainder was made up of natural gas.

Two ministries share responsibility for the energy sector: the Ministry of Oil and the Ministry of Water and Electricity. The Ministry of Water was created in 2001 by merging water related sub-departments. Its stated purpose is "to prepare a comprehensive plan to establish water and sewage networks all over the Kingdom. It will also develop the country’s water policies and propose new regulations to preserve water."[22][23] In 2003, this department was expanded.

Electricity consumption in Saudi Arabia increased sharply during the 1990–2010 period due to rapid economic development. Peak loads reached nearly 24 GW in 2001—25 times their 1975 level-and are expected to approach 60 GW by 2023.[2] The investment needed to meet this demand may exceed $90 billion. Consequently, there is an urgent need to develop energy conservation policies for sustainable development.

Electricity generation is 40% from Oil 52% from Natural Gas and 8% from steam. Generation capacity is approximately 55 GW.[24] A looming energy shortage requires Saudi Arabia to increase its capacity. Capacity is planned to be increased to 120 GW by 2032.[24]

The government has approved the construction of a $300 million facility to turn waste into energy. The facility will process 180 tons of waste per day, producing 6 MW of electricity and 250,000 US gallons (950 m3) of distilled water.[2]

Towards the end of 1998, the electricity sector embarked upon a major restructuring program. One of its aims was to achieve sustainable performance. Although progress has been made, remaining challenges, include high demand growth, low generation capacity reserve margins, inefficient energy use, absence of time-of-use rate adjustments, and the need for large capital investments to fund expansion.

Current sustainable policies, particularly those encouraging energy conservation, led to peak load savings of more than 871 MW in 2001, mainly as a result of collaboration between the Ministry of Water and Electricity and the Saudi Electricity Company.

Policies and programs are being developed for public awareness, energy regulation and legislation, and energy information and programming. If energy conservation is successful, demand can be reduced by 5–10%. This is equivalent to 3–6 GW of additional capacity, which represents a possible $1.5–3.0 billion saving over 20 years. Typically, investment in energy efficiency is 1% of utility sales revenues, which for a country like Saudi Arabia could be $15–60 million annually. If only savings on air conditioning are considered, the return on investment is equivalent to 400–500 MW of generating capacity—a saving of up to $0.25 billion p.a.

The development of electricity in the Kingdom of Saudi Arabia can be divided into two stages:

Phase 1: Initially, electricity generation was left to small, local companies. Such companies sold power at varying rates according to local costs.

In 1961 (1381 AH), the Department of Electricity Affairs was established within the Ministry of Commerce, with a mandate to regulate the electricity generation sector and to issue permits and licenses to electricity companies and to encourage national investment.

In 1972 (1392 AH), the Department of Electricity Services was established. This Department was separated from the Ministry of Commerce and was given the additional responsibility of planning electrical services for the Kingdom as a whole.

In 1974 (1394 AH), the Ministry of Commerce was divided into the Commerce Agency and the Industry and Electricity Agency. In that same year, the electricity tariff was set for all companies at a level below their actual costs.

In 1975 (1395 AH), the Government adopted ambitious plans for economic development requiring investment in industry and electrification. The Ministry of Industry and Electricity was formed, with an Industrial Affairs Agency and an Electricity Affairs Agency. The Electricity Affairs Agency expanded the planning, co-ordination and regulatory roles for providing electrical services. The Electricity Corporation was established in 1976 (1396 AH) to coordinate the electricity plans contained in the Kingdom's Development Plan.

From 1976 to 1981 (1396 – 1401 AH) all community electricity generation was gradually subsumed under the four regional Saudi Consolidated Electricity Companies (SCECOs), located in the Central, Eastern, Southern and Western regions.

With the formulation of a coherent development plan and the establishment of the SCECOs, the Government was able to bring electricity to the towns, villages and settlements throughout the Kingdom.

The number of electricity customers grew from 216,000 in 1970 (1390 AH) to 3,035,000 in 1996 and 4,955,906 in 2006.

In May 2003, electricity was made the responsibility of the Ministry of Water and Electricity.

The first SCECO (SCECO-East) was created in 1976 (1396/97 AH). This was followed in 1979 (1399/1400 AH) by SCECO-South. Electricity for the southwest is provided by another consolidated company, and the central region is served by SCECO-Central.

The General Electricity Corporation (GEC) had overall responsibility for the Kingdom's electricity system and had direct responsibility for the provision of electrical supplies to rural areas not then covered by the consolidated companies. The GEC represented the government equity holdings in all the independent electricity generating companies and was a source of finance for those companies' capital requirements.

In 1998, the Government announced the reorganization of the electricity sector by establishing a stock market company, named the Saudi Electric Company, through the merger of all the electricity companies operating in the Kingdom.

In 2010, King Abdullah City for Atomic and Renewable Energy was established. The Saudi government plans a $100 billion program of nuclear power with the goal of generating 110 gigawatts by 2032, using at least 12 nuclear power plants which are intended to begin coming into operation in 2019.[26] They have been negotiating with France, China, Japan, Korea, Russia, and Argentina over access to nuclear technology.[27]

^Peixe, Joao (15 June 2013). "Solar power shines in oil-rich Saudi Arabia". CS Monitor. Retrieved 17 April 2014. Saudi officials have talked about solar power for years, and even made plans to install 41,000MW over the next 20 years, but whilst China installed 5,000MW in 2012 alone, Saudi Arabia still has virtually no solar generation capacity.

^"Nuclear Power in Saudi Arabia". Updated December 2013. Nuclear Power Association. Retrieved 17 April 2014. Saudi Arabia plans to construct 16 nuclear power reactors over the next 20 years at a cost of more than $80 billion, with the first reactor on line in 2022.It projects 17 GWe of nuclear capacity by 2032 to provide 15% of the power then, along with over 40 GWe of solar capacity.

^Saudi Arabian power providers pay $5 to $15 a barrel for its fuel from state-owned Saudi Arabian Oil Co., according to the report. Brent crude, the benchmark for more than half the world’s oil, traded at $116 a barrel